Toyota Loses Global Sales Crown to VW Brand

Here’s a sure sign sedans are being kicked to the curb by the growing popularity of SUVs. Toyota just lost its global sales crown to the Volkswagen brand.

VW took the spot after selling more vehicles worldwide in 2016 than Toyota did. It ends Toyota’s four-year reign at the top.

Toyota’s fall is in large part due to the the falling demand for sedans, even its popular Camry. Another reason is slower than expected expansion in China. At the same time, VW benefited from growth in China thanks to a tax cut there that stoked consumer demand.

Toyota’s global sales, including its Lexus, Daihatsu and Hino brands, rose 0.2 percent to 10.2 million vehicles in 2016. That fell just short of VW Group’s record 10.3 million cars, trucks and buses, a 3.8 percent gain, even in spite of the VW’s diesel scandal.

It’s not all doom and gloom for Toyota though. The automaker continues to outperform its European rival in another key measurement – profit. Toyota’s was more than double Volkswagen’s in the six months through September, according to Bloomberg data. No earnings reports yet for the fourth quarter.

Looking ahead, Toyota must contend with possible trade tensions as U.S. President Donald Trump pressures foreign automakers to build more vehicles on U.S. shores. VW, meanwhile, faces decelerating demand in China as the tax reduction expires.

Since his inauguration, Trump has withdrawn the U.S. from the Trans-Pacific Partnership trade accord, reaffirmed a campaign promise to renegotiate the North American Free Trade Agreement involving Mexico and as we reported here last week, met with automakers to persuade them to keep production within the US.

Toyota built its first U.S. assembly plant in Georgetown, Kentucky, three decades ago, in part to appease Washington during an era of icy trade ties. Since then, it’s added factories in the country. In fact last year Toyota built a lot of vehicles here. More than 1.38 million cars and trucks in the U.S., behind only General Motors, Ford, and Fiat Chrysler.

Still, Toyota’s production was about 1 million vehicles short of its sales in the country. Any push for investment growth will come up against a U.S. auto market that is likely to wane after setting volume records in 2015 and then again in 2016.

In 2008, Toyota ended GM’s 77-year reign as the world’s largest automaker. But it held on to the top annual sales spot until 2011, when production was disrupted by natural disasters in Japan and Thailand. The Japanese company took the lead again in 2012 and stayed there through 2015.